Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 29, 2014 | Mar. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | CREATIVE LEARNING Corp | ||
Entity Central Index Key | 1394638 | ||
Document Type | 10-K | ||
Document Period End Date | 30-Sep-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -21 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $35,901,000 | ||
Entity Common Stock, Shares Outstanding | 11,829,409 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Current Assets: | ||
Cash | $3,061,458 | $2,004,947 |
Restricted Cash | 180,009 | |
Accounts receivable, less allowance for doubtful accounts of $41,000 and $10,000, respectively | 303,122 | 310,150 |
Prepaid expenses | 7,850 | 826 |
Other receivables - current portion | 126,339 | 94,301 |
Income Tax Receivable | 75,843 | |
Deferred tax asset | 48,723 | 1,058 |
Total current assets | 3,803,344 | 2,411,282 |
Note receivable from related party | 70,000 | 70,000 |
Other receivables - net of current portion | 67,749 | 37,491 |
Property and equipment, net of accumulated depreciation of $98,238 and $60,073, respectively | 322,659 | 294,863 |
Intangible assets | 125,754 | 95,270 |
Deposits | 11,425 | 15,000 |
Total Assets | 4,400,931 | 2,923,906 |
Current Liabilities: | ||
Accounts payable - Related parties | 5,690 | |
Accounts payable - Third party | 534,932 | 171,889 |
Payroll accruals | 13,105 | |
Unearned revenue | 35,900 | |
Accrued stock based compensation | 98,400 | |
Accrued marketing fund | 180,009 | 100,754 |
Customer deposits | 96,737 | 120,001 |
Income tax payable | 13,131 | |
Deferred tax liability | 5,550 | |
Notes Payable: Related parties | 20,000 | |
Notes Payable: Other | 2,225 | 3,560 |
Legal settlement | 55,000 | |
Total current liabilities | 972,853 | 484,030 |
Notes payables - net of current portion | 5,297 | |
Long-term deferred tax liability | 22,230 | |
Total Liabilities | 995,083 | 489,327 |
Stockholders' Equity: | ||
Preferred stock, $.0001 par value; 10,000,000 shares authorized; -0- and -0- shares issued and outstanding, respectively | ||
Common stock, $.0001 par value; 50,000,000 shares authorized; 11,829,409 and 11,809,409 shares issued and outstanding, respectively | 1,183 | 1,181 |
Additional paid in capital | 2,263,501 | 2,157,673 |
Retained earnings | 1,141,164 | 275,725 |
Total Stockholders' Equity | 3,405,848 | 2,434,579 |
Total Liabilities and Stockholders' Equity | $4,400,931 | $2,923,906 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Current Assets: | ||
Allowance for doubtful accounts | $41,000 | $10,000 |
Accumulated depreciation | $98,238 | $60,073 |
Stockholders' Equity | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, Authorized | 50,000,000 | 50,000,000 |
Common stock, Issued | 11,829,409 | 11,809,409 |
Common stock, outstanding | 11,829,409 | 11,809,409 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | ||
Initial franchise fees | $5,787,058 | $3,700,221 |
Royalties fees | 1,845,530 | 995,900 |
Corporate Creativity Center Sales | 78,218 | 124,598 |
Total revenues | 7,710,806 | 4,820,719 |
Operating expenses: | ||
Franchise consulting and commissions - related parties | 616,061 | 746,226 |
Franchise consulting and commissions - Other | 1,698,359 | 976,776 |
Franchise training and expenses | 502,661 | 272,125 |
Salaries and payroll taxes | 1,104,738 | 539,982 |
Advertising | 917,429 | 455,108 |
Professional fees | 265,742 | 97,886 |
Office expense | 295,039 | 158,964 |
Depreciation | 39,915 | 30,267 |
Stock-based compensation | 56,630 | 108,280 |
General and administrative expenses | 820,540 | 389,348 |
Total Operating expenses | 6,317,114 | 3,774,962 |
Income from operations | 1,393,692 | 1,045,757 |
Other income (expense): | ||
Interest (expense): | -455 | -4,882 |
Gain on sale of intangible assets | 18,335 | |
Loss on disposal of property and equipment | -56,629 | |
Other income (expense) | 61,563 | -80,846 |
Total Other Income (expense) | 22,814 | -85,728 |
Income before provision for income taxes | 1,416,506 | 960,029 |
Provision for income taxes (Note 12) | 551,067 | 12,073 |
Net income | $865,439 | $947,956 |
Net Income attributable to common stockholders per share | ||
Basic | $0.07 | $0.08 |
Basic Weighted average number of common shares outstanding | 11,812,861 | 11,675,102 |
Diluted | $0.07 | $0.08 |
Diluted Weighted average number of common shares outstanding | 11,870,018 | 11,678,873 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities: | ||
Net income | $865,439 | $947,956 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 39,915 | 30,267 |
Change in allowance for doubtful accounts | 31,000 | 11,036 |
Loss on disposal of property and equipment | 56,629 | |
Gain on sale of intangible assets | -18,335 | -7,553 |
Stock based compensation | 56,630 | |
Stock based commission | 147,600 | |
Write-off of materials purchased with legal settlement | 26,300 | |
Write-off of Note Receivable | 23,000 | |
Compensatory equity issuances | 108,280 | |
Changes in operating assets and liabilities: | ||
Restricted cash | -79,255 | |
Accounts receivable | -23,972 | -125,703 |
Prepaid expenses | -7,024 | 9,890 |
Income tax receivable | -75,843 | |
Other receivables | -37,396 | -28,778 |
Deposits | 3,575 | 17,619 |
Deferred tax assets | -47,665 | -1,058 |
Accounts payable - Related Parties | -5,690 | |
Accounts payable - Third Parties | 358,269 | -2,363 |
Payroll accruals | -13,105 | |
Unearned revenue | -35,900 | |
Accrued liabilities | 1,228 | |
Accrued marketing funds | 79,255 | 10,599 |
Deferred tax liabilities | 27,780 | |
Customer deposits | -23,264 | 72,501 |
Income tax payable | -13,131 | 13,131 |
Accrued expenses | 35,900 | |
Net cash provided by operating activities | 1,311,812 | 1,115,952 |
Cash flows from investing activities: | ||
Acquisition of property and equipment | -118,340 | -25,991 |
Acquisition of intangibles | -10,000 | -56,800 |
Cash proceeds received on sale of Intangible assets | 40,425 | |
Issuance of notes receivable - related party | -70,000 | |
Net cash (used in) investing activities | -87,915 | -152,791 |
Cash flows from financing activities: | ||
Repayment of notes payable - related parties | -20,000 | |
Repayment of notes payable | -6,632 | |
Payment of legal settlement | -40,000 | |
Net cash (used in) financing activities | -66,632 | |
Net change in cash | 1,157,265 | 963,161 |
Cash, beginning of period less restricted cash of $100,754 | 1,904,193 | 1,041,786 |
Cash, end of period | 3,061,458 | 2,004,947 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for: income taxes | 533,031 | |
Cash paid during the period for: interest | 455 | 4,882 |
Supplemental non-cash investing and financing activities: | ||
Intangible assets acquired with common stock issued | 23,300 | |
Intangible assets acquired in legal settlement | 62,700 | |
Intangible assets acquired by assumption of accounts payable | 4,774 | |
Intangible assets sold with notes receivables | 24,900 | |
Equipment acquired in legal settlement | 6,000 | |
Materials acquired in legal settlement | 26,300 | |
Common stock issued to settle note payable | 20,000 | |
Reclassification of prepaid expenses | $15,618 |
Consolidated_Statement_of_Stoc
Consolidated Statement of Stockholders' Equity (USD $) | Common Stock | Additional Paid-In Capital | Retained Earnings (Deficit) | Total |
Beginning Balance, Amount at Sep. 30, 2012 | $1,155 | $2,006,118 | ($672,230) | $1,335,044 |
Beginning Balance, Shares at Sep. 30, 2012 | 11,556,075 | |||
Stock issued as payment on notes payables, Shares | 20,000 | |||
Stock issued as payment on notes payables, Amount | 2 | 19,998 | 20,000 | |
Stock issued for business acquisition, Shares | 45,000 | |||
Stock issued for business acquisition, Amount | 4 | 23,296 | 23,300 | |
Compensatory stock issuances, Shares | 55,000 | |||
Compensatory stock issuances, Amount | 6 | 32,996 | 33,001 | |
Replacement of prior shares issued erroneously, Shares | 66,667 | |||
Replacement of prior shares issued erroneously, Amount | 7 | 38,660 | 38,667 | |
Adjustment to correct share counts, Shares | 66,667 | |||
Adjustment to correct share counts, Amount | 7 | 29,993 | 30,000 | |
Stock options expense | 6,613 | 6,613 | ||
Net income | 947,955 | 947,956 | ||
Ending Balance, Amount at Sep. 30, 2013 | 1,181 | 2,157,673 | 275,725 | 2,434,579 |
Ending Balance, Shares at Sep. 30, 2013 | 11,809,409 | |||
Compensatory stock issuances, Shares | 20,000 | |||
Compensatory stock issuances, Amount | 2 | 49,198 | 49,200 | |
Stock options expense | 56,630 | 56,630 | ||
Net income | 865,439 | 865,439 | ||
Ending Balance, Amount at Sep. 30, 2014 | $1,183 | $2,263,501 | $1,141,164 | $3,405,848 |
Ending Balance, Shares at Sep. 30, 2014 | 11,829,409 |
Nature_of_Organization_and_Sum
Nature of Organization and Summary of Significant Accounting Policies | 12 Months Ended | |
Sep. 30, 2014 | ||
Notes to Financial Statements | ||
1. Nature of Organization and Summary of Significant Accounting Policies | Nature of Organization | |
Creative Learning Corporation (“CLC” or the “Company”), formerly B2 Health, Inc., was incorporated March 8, 2006 in the State of Delaware. BFK Franchise Company LLC (“BFKF”) was formed in the State of Nevada on May 19, 2009. Effective July 2, 2010, CLC was acquired by BFKF in a transaction classified as a reverse acquisition. CLC concurrently changed its name from B2 Health, Inc. to Creative Learning Corporation. The financial statements represent the activity of BFKF from May 19, 2009 forward, and the consolidated activity of BFKF and CLC from July 2, 2010 forward. BFKF and CLC are hereinafter referred to collectively as the "Company". | ||
In addition to the accounts of CLC and BFKF, the accompanying consolidated financial statements include the accounts of CLC’s subsidiaries, BFK Development Company LLC (“BFKD”) from November 25, 2009 (BFKD’s inception) forward, CI Franchise Company LLC (“CI”) from September 14, 2012 (CI’s inception) forward, and Sew Fun Franchise Company LLC (SF) from January 8, 2013 (SF’s inception) forward. | ||
The registration statements for BFK Development Company LLC, CI Franchise Company LLC, and Sew Fun Franchise Company LLC do not have a termination date associated with the Life of the Organizations. Each of the above listed LLC’s has a single member, controller 100% by the Company. | ||
BFKF held a 50% ownership interest in BFKD from November 25, 2009 through October 2, 2010. On October 3, 2010, the BFKF acquired the 50% noncontrolling interest in BFKD. Immediately following the acquisition of the noncontrolling interest, BFKF transferred its 100% interest in BFKD to CLC. | ||
Creative Learning Corporation operates wholly owned subsidiaries BFK FRANCHISE COMPANY, LLC, CI FRANCHISE COMPANY, LLC AND SEW FUN FRANCHISE COMPANY, LLC under the trade names Bricks 4 Kidz®, Challenge Island®, and Sew Fun Studios™ respectively, that offer children's enrichment and education franchises. | ||
Basis of Presentation | ||
This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s financial statements. The financial statements and notes are representation of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. | ||
The Company uses the accrual basis of accounting and is presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. | ||
Principles of Consolidation | ||
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. | ||
Variable Interest Entity | ||
The Company follows the guidelines in FASB Codification of ASC 810 “Consolidation” which indicates "a legal entity that is deemed to be a business need not be evaluated by a reporting entity to determine if the legal entity is a Variable Interest Entity (“VIE")” unless any one of four conditions exist: | ||
- | The reporting entity, its related parties, or both participated significantly in the design or redesign of the legal entity; | |
- | The legal entity is designed so that substantially all of its activities involve or are conducted on behalf of the reporting entity and its related parties; | |
- | The reporting entity and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the legal entity; or | |
- | The activities of the legal entity are primarily related to the securitizations or other forms of asset-backed financings or single-lessee leasing arrangements. | |
A VIE is an entity that either (a) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate. The Company has not identified any VIEs as of September 30, 2014. | ||
Fiscal year | ||
The Company operates on a September 30 fiscal year-end. | ||
Related Parties | ||
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. | ||
Use of Estimates | ||
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management include allowance for doubtful accounts, allowance for deferred tax assets, depreciation of property and equipment, amortization of intangible assets, fair market value of equity instruments. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. | ||
Cash and Cash Equivalents | ||
The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no cash equivalents at September 30, 2014 and 2013.The Company had cash of $3,061,458 and $1,904,193 as of September 30, 2014 and 2013, respectively. | ||
The Company has restricted cash of $180,009 at September 30, 2014 and $100,754 at September 30, 2013 associated with a marketing funds collected from the franchisee’s. Per the franchise agreements a marketing fund of 2% of revenues is collected and held for promotion of the brand. (see note 6) | ||
The Company has one operating account with Wells Fargo that exceed the $250,000 FDIC limit by $2,748,000. The Company is confident the asset is secure based upon our history with and the stability of the institution. | ||
Accounts Receivable | ||
The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts as of September 30, 2014 and 2013 are adequate, but actual write-offs could exceed the recorded allowance. At September 30, 2014 and 2013, the Company’s allowance for doubtful accounts totaled $41,000, and $10,000, respectively. During the year ended September 30, 2014 and September 30, 2013 the value of accounts written-off to the reserve were approximately $12,000 and $0 respectively. | ||
Property, Equipment and Depreciation | ||
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, which range from three to forty years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. | ||
Website development costs | ||
The Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage. | ||
Costs associated with the website consist primarily of website development costs paid to third parties. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. All capitalized web development cost are captured in property and equipment. | ||
Fair Value of Financial Instruments | ||
The carrying amounts of cash, accounts and notes receivable, prepaid expenses, property and equipment, intangible assets, deposits, and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments. | ||
The FASB Accounting Standards Codification (“ASC”) 825, Financial Instruments, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: | ||
Level 1: | Quoted prices in active markets for identical assets or liabilities. | |
Level 2: | Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. | |
Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | ||
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. | ||
Long-Lived Assets | ||
The Company’s long-lived assets consisted of property and equipment, and intangible assets are reviewed for impairment in accordance with the guidance of the FASB Topic ASC 360, Property, Plant, and Equipment, and FASB ASC Topic 205, Presentation of Financial Statements. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Through September 30, 2014, the Company had not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future. | ||
Revenue Recognition | ||
Revenue is recognized on an accrual basis after services have been performed under contract terms, the service price to the client is fixed or determinable, and collectability is reasonably assured. | ||
Since these franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as soon as they leave training. The franchise fees are fully collectible and nonrefundable as of the date of the signing of the franchise agreement, but the franchise fees are not recognized as revenue until initial training has been completed and when substantially all of the services required by the franchise agreement have been fulfilled by the Company in accordance with ASC Topic 952-605 Revenue Recognition-Franchisor. Royalties and marketing fees are recognized as earned. | ||
As of September 30, 2014 and 2013 the Company had $0 and $35,900 respectively in unearned revenue for franchise fees collected but not yet earned per the revenue recognition policy. | ||
Advertising Costs | ||
Advertising costs are expensed as incurred. The Company incurred advertising costs for the years ended September 30, 2014 and 2013 of approximately $920,000 and $445,000, respectively. | ||
Income Taxes | ||
The provision for income taxes, income taxes payable and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. | ||
The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. | ||
When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. | ||
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 30, 2014 and September 30 2013, respectively, and has not recognized interest and/or penalties during the years ended September 30, 2014 and September 30, 2013, respectively, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within in the next 12 months. | ||
The tax years subject to examination by major tax jurisdictions include the years 2011 and forward by the U.S. Internal Revenue Service, and the years 2010 and forward for various states. | ||
Net earnings (loss) per share | ||
ASC 260-10-45, “Earnings Per Share”, requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. | ||
Stock-based compensation | ||
The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. | ||
Recent accounting pronouncements | ||
In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists(ASU 2013-11), to require that in certain cases, an unrecognized tax benefit, or portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the same taxing jurisdiction. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not believe the adoption of this standard will have a significant impact on the Company’s consolidated financial statements. | ||
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
2. Related Party Transactions | During the years ended September 30, 2014 and 2013, the Company paid related parties (companies related by common control) for the following expenses: | ||||||||
Commissions and Consulting | |||||||||
Fiscal Years Ending | |||||||||
30-Sep | 30-Sep | ||||||||
Related Party | 2014 | 2013 | |||||||
FranVentures, LLC | $ | 289,061 | $ | 248,127 | |||||
MC Logic, LLC | $ | 244,000 | $ | 137,000 | |||||
Leap Ahead Learning Company | $ | 83,000 | $ | 108,000 | |||||
$ | 616,061 | $ | 493,127 | ||||||
Fran Ventures, LLC is 100% owned by Brian Pappas, Principal Officer and Director of the Company. MC Logic, LLC is 100% owned by Michelle Cote a Director of the Company. Leap Ahead Leaning Company is 100% owned by Dan O’Donnell a Director of the Company. | |||||||||
In June of 2013, the Company issued 50,000 stock options (25,000 each to an officer/director and an employee) at an option price of $0.60 per share, with an expiration date of December 31, 2015, resulting in a $6,612 stock option expense to the Company using the Black Scholes model. See note 9. | |||||||||
In July of 2013, the Company loaned $70,000 to AudioFlix, Inc., a related party entity. The loan was personally guaranteed by Brian Papas. The loan bears interest at 6%, payable monthly and is due and payable on July 1, 2015. The unpaid balance of the loan is convertible prior to July 1, 2015 into unrestricted shares of the common stock of AudioFlix, Inc. at a price of $0.35 per share. | |||||||||
In February of 2014, the Company issued 70,000 stock options (20,000 each to two officers and 10,000 each to three employees) at an option price of $1.55 per share, with an expiration date of December 31, 2016, resulting in a $56,630 stock option expense to the Company using the Black Stoles model. See note 9. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
3. Property and Equipment | Property and equipment consisted of the following: | |||||||||
Year End | Year End | |||||||||
September 30, | September 30, | |||||||||
Description | 2014 | 2013 | ||||||||
Equipment | $ | 44,930 | $ | 33,109 | ||||||
Furniture & Fixtures | 75,351 | 57,654 | ||||||||
Property Improvement | 233,615 | 233,615 | ||||||||
Software | 30,558 | 30,558 | ||||||||
Total Depreciable Assets | $ | 384,454 | $ | 354,936 | ||||||
Accumulated Depreciation | (98,238 | ) | (60,073 | ) | ||||||
NBV Fixed Assets | $ | 286,216 | $ | 294,863 | ||||||
Work In Progress (1) | 36,443 | - | ||||||||
$ | 322,659 | $ | 294,863 | |||||||
___________ | ||||||||||
(1) This is website development and is expected to be completed June 2015 at total cost of $45,000. | ||||||||||
Depreciation expense totaled $39,915 and $30,267, respectively, for the years ended September 30, 2014 and 2013. |
Intangible_Assets
Intangible Assets | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Notes to Financial Statements | |||||
4. Intangible Assets | As of September 30, 2014, the Company had $125,754 of intangible assets, consisting of a second and a third franchise concept and trademarks for $25,250 and $23,300, respectively, under developing subsidiaries called CI Franchise Company LLC (Challenge Island) and Sew Fun Franchise Company LLC. Also included is a net change of $30,484 as the result of the repurchase of three BKF franchises and sale of one BKF franchises in Nevada, Texas, and Missouri. | ||||
As of September 30, 2013, the Company had $95,270 of intangible assets, consisting of a second and a third franchise concept and trademarks for $25,250 and $23,300, respectively, under newly created subsidiaries called CI Franchise Company LLC (Challenge Island) and Sew Fun Franchise Company LLC, a $40,000 purchase of a Franchisee territory in Denver, and $6,720 for the purchase of a partial Franchisee Territory in Texas. | |||||
Creative Learning Corporation | |||||
Intangible Asset Roll-forward | |||||
Balance October 1, 2012 | 46,720 | ||||
Additions | 48,550 | ||||
Disposals | - | ||||
Balance September 30, 2013 | 95,270 | ||||
Additions | 77,474 | ||||
Disposals | (46,990 | ) | |||
Balance September 30, 2014 | 125,754 |
Notes_and_Other_Receivables
Notes and Other Receivables | 12 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Notes to Financial Statements | ||||||||||||||
5. Notes and Other Receivables | In July of 2013, the Company issued a $70,000 loan to a related party company, personally guaranteed by the related party, at 6% interest, monthly interest only payments and fully due and payable by July 1, 2015. The Note is convertible up to the maturity date to unrestricted shares in the related party company for any unpaid balance at $0.35 per share. As of September 30, 2014 the $70,000, per the agreement is outstanding. | |||||||||||||
At September 30, 2014 and 2013 respectively, the Company held certain other receivables totaling $194,088 and $131,792 respectively for extended payment terms of franchise fees, generally non-interest bearing notes with monthly payments, payable within one to two years, and Foreign Tax Credits at September 30, 2014 of $22,729. | ||||||||||||||
2015 | 2016 | Total | ||||||||||||
Payment schedules for Notes And Other Receivables | $ | 126,339 | $ | 67,749 | $ | 194,088 |
Accrued_Marketing_Fund
Accrued Marketing Fund | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
6. Accrued Marketing Fund | Per the terms of the franchise agreements, the Company collects 2% of franchisee’s gross revenues for a marketing fund, managed by the Company, to allocate towards national branding of the Company’s concepts to benefit the franchisees. |
The marketing fund amounts are accounted for as a liability on the balance sheet and the actual collections are deposited into a marketing fund bank account. Expenses pertaining to the marketing fund activities are paid from the marketing fund and reduce the liability account. | |
As of September 30, 2014 and 2013, the accrued marketing fund liability balances were $180,009 and $100,754 respectively. |
Notes_Payable
Notes Payable | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
7. Notes Payable | Note dated September 2012 |
In September of 2012, the Company issued a non-interest bearing promissory note of $40,000 to a related party for consulting services payable by issuance of 40,000 shares of the Company’s common stock. As of September 30, 2014 and 2013, the remaining balance on this promissory note was $0 and $20,000, respectively. During the year ended September 30, 2013, payments of $20,000 were made with the issuance of common stock. During the year ended September 30, 2014, payments of $20,000 cash were made. | |
Deferred commission note payable | |
As of September 30, 2014 and September 30, 2013, the Company owed respectively $2,225 and $8,857 in deferred commission payments, non-interest bearing, payable in monthly payments, on deferred payment schedules related to extended payment terms of Franchise Fees. |
Common_Stock_Issuances
Common Stock Issuances | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
8. Common Stock Issuances | During the year ended September 30, 2013, the Company issued 20,000 shares of its common stock for partial payment of a promissory note to a related party at the stated price valued at $20,000 at the stated price in the promissory note of $1.00 per share. |
During the year ended September 30, 2013, the Company had two issuances of 35,000 and 10,000 shares of its common stock related to the acquisition of a third Franchise concept valued at $17,500 or $0.50 per share and $5,800 or $0.58 per share, respectively. | |
During the year ended September 30, 2013, the Company had three issuances of 35,000, 5,000 and 15,000 shares of its common stock in exchange for consulting services, valued at $21,000, $3,000 and $9,000, respectively, or at $0.60 per share. | |
During the year ended September 30, 2013, the Company, as a gesture of good will, issued 66,667 shares of its common stock to an individual investor who had purchased stock in a prior year in a pass through arrangement with a third party company that did not fulfill their commitment to transfer the stock. It was determined there was no recourse with the third party company, and the shares were issued at a Fair Market Value of $38,667 or $0.58 per share. Related to this transaction, an adjustment was made to the Company issued share count of an additional 66,667 shares that were also issued to the third party company in the prior year in error. The Company was awaiting their return and cancellation. Without recourse with the third party company, these 66,667 shares were recorded at a fair value of $30,000 or $0.45 per share based on the value on the date of the original issue. | |
On June 23, 2014, the Company agreed to issue 60,000 shares, over several quarters, of its common stock for payment relating to a commissions earned for Master Franchise sales at such date. The total value of the 60,000 shares at the date of the agreement was $147,600 (60,000 shares times the fair value of $2.46 per share). The Company recorded the full fare value to Commission Expense and recorded a liability under accrued stock based compensation in the accompanying consolidated statement balance sheet. The first 20,000 shares were issued on July 29, 2014 with the respective $49,200 being re-classed to common stock and additional paid in capital with remaining balance of $98,400 recorded under accrued stock based compensation at September 30, 2014. |
Stock_Options_and_Warrants
Stock Options and Warrants | 12 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Notes to Financial Statements | ||||||||||||||
9. Stock Options and Warrants | Employee stock options | |||||||||||||
The Company accounts for employee stock options under ASC 718, Compensation – Stock Compensation, whereby option costs are recorded based on the Black-Scholes option pricing model. Unless otherwise provided for, the Company covers option exercises by issuing new shares. | ||||||||||||||
On July 1, 2013, the Company issued 50,000 common stock purchase options (25,000 each to an employee and to an officer/director), allowing the holders to purchase one share of common stock per option, exercisable at $.60 per share with an expiration date of December 31, 2015. At September 30, 2014 these share options were still outstanding. The fair value of the option grants were estimated on the date of grant using the Black-Scholes option pricing model. | ||||||||||||||
On February 3, 2014, the Company issued 70,000 common stock purchase options (20,000 each to two officers and 10,000 each to three employees) allowing the holders to purchase one share of common stock per option, exercisable at $1.55 per share with an expiration date of December 31, 2016. These options were fully vested on October 1, 2014. At September 30, 2014 these share options were still outstanding. The fair value of the options grants were estimated on the date of grant using the Black-Scholes option pricing model. The company incurred and recorded compensation expense of $56,630 for the year ended September 30, 2014 and $6,613 for the year ended September 30, 2013. | ||||||||||||||
Description | Number of | Weighted | Expiration | Aggregate | ||||||||||
Shares | Average Exercise | Date | Intrinsic | |||||||||||
Price | Value | |||||||||||||
Outstanding October 1, 2012 | - | - | ||||||||||||
Granted July 1, 2013 | 50,000 | 0.6 | 12/31/15 | $ | - | |||||||||
Outstanding 09/30/2013 | 50,000 | 0.6 | $ | - | ||||||||||
Granted February 3, 2014 | 70,000 | 1.55 | 12/31/16 | $ | - | |||||||||
Outstanding 09/30/2014 | 120,000 | 1.15 | - | |||||||||||
Exercisable at September 30, 2014 | 50,000 | |||||||||||||
Expected to vest at September 30, 2014 | 120,000 | |||||||||||||
The Company recognized stock compensation expense as follows: | ||||||||||||||
Year Ended | Year Ended | |||||||||||||
30-Sep | 30-Sep | |||||||||||||
2014 | 2013 | |||||||||||||
Stock Option Expense | $ | 56,630 | $ | 6,613 | ||||||||||
No additional stock based compensation is to be recognized on these stock options. | ||||||||||||||
The fair value of the options granted during the various periods was estimated at the date of grant using the Black-Scholes option-pricing model and the following assumptions: | ||||||||||||||
2014 | 2013 | |||||||||||||
Year Options were granted | ||||||||||||||
Market value of stock on grant date | $ | 1.55 | $ | 0.6 | ||||||||||
Risk-free interest rate | 0.3 | % | 0.61 | % | ||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||
Volatility Factor | 100 | % | 36 | % | ||||||||||
Weighted average expected life | 2 years | 2 years | ||||||||||||
Expected forfeiture rate | 0 | % | 0 | % | ||||||||||
Fair value is generally based on independent sources such as quoted market prices or dealer price quotations. To the extent certain financial instruments trade infrequently or are non-marketable securities, they may not have readily determinable fair values. The Company estimated the fair value of the options using a Black Scholes option pricing model and available information that management deems most relevant. The stock price is the closing price of the Company’s stock on the valuation date; the risk free interest rate is based on the U.S. Government Securities rate for 2 year maturities on the date of issuance; the volatility is a statistical measure (standard deviation) of the tendency of the Company’s stock price to change over time; the exercise price is the price at which the Options can be purchased by exercising prior to its expiration; the dividend yield is not applicable due to the Company not intending to declare dividends; the contractual life is based on the average exercise period of the Options; and the fair market value is value of the options based on the Black Scholes model on the valuation date. |
Franchise_Operations
Franchise Operations | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
10. Franchise Operations | The Company currently supports independently owned franchises located in 43 states, 9 Canadian provinces and 31 other countries. Following is a summary of the annual franchise activity: | ||||||||
BFK Franchise Company LLC | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Franchises in Operation - beginning of year | 380 | 210 | |||||||
Franchises sold during the year | 210 | 175 | |||||||
Franchises cancelled, terminated or repurchased during the year | (6 | ) | (5 | ) | |||||
Franchises in operation - end of year | 584 | 380 | |||||||
CI Franchise Company LLC | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Franchises in Operation - beginning of year | 15 | - | |||||||
Franchises sold during the year | 21 | 15 | |||||||
Franchises cancelled, terminated or repurchased during the year | (2 | ) | - | ||||||
Franchises in operation - end of year | 34 | 15 | |||||||
Franchises are required to pay the Company an initial franchise fee, royalty fees and a marketing fee. The marketing fee is 2% of gross sales, and the current royalty fee is 7% of gross sales. A limited number of earlier agreements set the royalty fee at 5% if they opened a Creativity Center, but is not in the current agreements. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
11. Commitments and Contingencies | Lease Commitments | ||||||||||||||||
The Company entered into a Business Lease with Village Square at Palencia in July 2014, to lease unit 103B, Office Space 2, located at 701 Market Street, St. Augustine, Florida. The contract period is beginning August 1, 2014 and ending July 31, 2017. The monthly rent is $950.00. | |||||||||||||||||
The Company entered into a Business Lease with Village Square at Palencia in July 2014, to lease unit 114 located at 701 Market Street, St. Augustine, Florida. The contract period is beginning July 1, 2014 and ending June 15, 2019. The monthly rent is $1,425.00. | |||||||||||||||||
The following table summarizes the Company’s contractual lease obligations as of September 30, 2014: | |||||||||||||||||
2015 | 2016 | 2017 | Total | ||||||||||||||
Lease of office space | 28,500 | 28,500 | 26,600 | $ | 83,600 | ||||||||||||
Rent expense was $18,106 and $49,131, respectively, for the years ended September 30, 2014 and 2013. | |||||||||||||||||
Legal Settlement | |||||||||||||||||
On September 27, 2013, BFK Franchise Company LLC was named as a co-defendant in a Complaint filed by a Franchisee in Nevada who had purchased three existing Las Vegas territories from other Franchisees. In December of 2013, without any further legal process, BFK Franchise Company LLC entered into a settlement with the Nevada Franchisee to purchase the three Las Vegas territories for $95,000. At the end of the fiscal year September 30, 2014 the outstanding balance of the note was $55,000. This obligation will be satisfied during the next 11 months. | |||||||||||||||||
The Company may be involved in arbitration with Sew Fun, LLC (SFLLC), from which the Company purchased intellectual property to franchise a new sewing franchise concept. As of the date of this filing there has been no formal complaint filed against the Company by SFLLC, but managements has anticipated that there may be a complaint filed if settlement negotiations are not successful. SFLLC is seeking $614,000 for what it claims is the Company’s failure to sell Sew Fun Studios franchises in 2013 and 2014. The Company is seeking $804,000 against SF for the deceptive trade practices that the Company claims induced the Company to acquire SFLLC’s intellectual property. As of the date of issuance, the Company’s legal counsel believes an unfavorable outcome against the Company is unlikely. However, an estimated range of loss could be from $50,000 to $100,000. As of September 30, 2014, the Company has not accrued any amounts related to this matter. | |||||||||||||||||
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||
12. Income Taxes | The provision for income taxes, income taxes payable and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. | |||||||||||||||||
The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. | ||||||||||||||||||
When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a | ||||||||||||||||||
likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. | ||||||||||||||||||
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 30, 2014 and September 30, 2013, respectively, and has not recognized interest and/or penalties during the years ended September 30, 2014 and September 30, 2013, respectively, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within in the next 12 months. | ||||||||||||||||||
The tax years subject to examination by major tax jurisdictions include the years 2010 and forward by the U.S. Internal Revenue Service, and the years 2009 and forward for various states. | ||||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2014 | 2013 | |||||||||||||||||
Deferred tax assets: | ||||||||||||||||||
Short-term | $ | 48,723 | $ | 1,058 | ||||||||||||||
Long-term | -0- | -0- | ||||||||||||||||
Total deferred tax asset | $ | 48,723 | $ | 1,058 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||||
Short-term | $ | (27,780 | ) | $ | -0- | |||||||||||||
Long-term | -0- | -0- | ||||||||||||||||
Total deferred tax liabilities | $ | (27,780 | ) | $ | -0- | |||||||||||||
Total deferred tax assets | 48,723 | 1,058 | ||||||||||||||||
Net deferred tax assets (liability) | $ | 20,943 | $ | 1,058 | ||||||||||||||
The types of temporary differences between the tax basis of assets and their financial reporting amounts that give rise to a significant portion of the deferred assets and liabilities are as follows: | ||||||||||||||||||
30-Sep-14 | 30-Sep-13 | |||||||||||||||||
Temporary | Tax | Temporary | Tax | |||||||||||||||
Difference | Effect | Difference | Effect | |||||||||||||||
Deferred tax assets: | ||||||||||||||||||
Depreciation timing difference | $ | -0- | $ | -0- | $ | 3,084 | $ | 1,058 | ||||||||||
Allowance for bad debt | 41,000 | 16,195 | -0- | -0- | ||||||||||||||
Florida income tax | 82,350 | 32,528 | -0- | -0- | ||||||||||||||
Total deferred tax asset | 123,350 | 48,723 | 3,084 | 1,058 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||||
Depreciation timing difference | (70,329 | ) | (27,780 | ) | -0- | -0- | ||||||||||||
Total deferred liability | (70,329 | ) | (27,780 | ) | -0- | -0- | ||||||||||||
Net deferred tax asset | $ | 53,021 | $ | 20,943 | $ | 3,084 | $ | 1,058 | ||||||||||
The Income Tax expense for September 30, 2014, reflects the taxes due with taxable income of $1,416,506. The tax year ending September 30, 2013 included a $907,000 NOL Carryforward with taxable income for the year of $64,000. | ||||||||||||||||||
A current Income Tax Receivable is due for September 30, 2014 from the Federal Government and Florida State. This is the result of excess quarterly deposit made during the year. | ||||||||||||||||||
The components of the provisions for income taxes for fiscal years 2014 and 2013 are as follows: | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Current: | ||||||||||||||||||
Federal | $ | 489,188 | $ | 10,884 | ||||||||||||||
State | 82,822 | 2,247 | ||||||||||||||||
Total current provision | 572,010 | 13,131 | ||||||||||||||||
Deferred: | ||||||||||||||||||
Federal | (20,943 | ) | (1,058 | ) | ||||||||||||||
State | - | - | ||||||||||||||||
Total deferred provision | (20,943 | ) | (1,058 | ) | ||||||||||||||
Total provision | $ | 551,067 | $ | 12,073 | ||||||||||||||
The income tax provision differs from the amount which would result from the statutory federal income tax rate primarily as a result of state income taxes. | ||||||||||||||||||
The income tax provision differs from that computed using the federal statutory rate applied to income before taxes as follows for fiscal years 2014 and 2013: | ||||||||||||||||||
2014 | 2013 | |||||||||||||||||
Amount | % | Amount | % | |||||||||||||||
Provision at statutory rates | $ | 489,188 | 32.13 | % | $ | 10,884 | 17.13 | % | ||||||||||
State income tax, net of federal benefit | 82,822 | 5.5 | % | 2,247 | 3.54 | % | ||||||||||||
Other temporary items | ||||||||||||||||||
Bad Debt | (16,195 | ) | 1.1 | % | - | |||||||||||||
Florida income tax | (32,528 | ) | 2.2 | % | ||||||||||||||
Depreciation | 27,780 | 1.9 | % | (1,058 | ) | 1.7 | % | |||||||||||
Other permanent items | ||||||||||||||||||
Total income tax provision | $ | 551,067 | 36.23 | % | $ | 12,073 | 19 | % | ||||||||||
Earnings_Per_Share
Earnings Per Share | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
13. Earnings Per Share | FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator denominator of the basic and diluted earnings (loss) per share (EPS) computations. | ||||||||
Basic earnings per share are computed by dividing the net earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares are dilutive. Dilutive common stock equivalents at September 30, 2014 were stock options and stock to be issued under accrued stock based compensation. Dilutive common stock equivalents at September 30, 2013 were stock options. | |||||||||
The following table sets for the computation of basic and diluted net income (loss) per share: | |||||||||
Year ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Net income attributed to common stockholders | $ | 865,439 | $ | 947,956 | |||||
Basic weighted average outstanding shares of common stock | 11,812,861 | 11,675,102 | |||||||
Dilutive effect of common stock equivalents (options of 50,252 and stock of 6,905) as of September 30, 2014. | 57,157 | 3,771 | |||||||
Dilutive weighted average common stock equivalents | 11,870,018 | 11,678,873 | |||||||
Net earnings per share of common stock Basic | $ | 0.07 | $ | 0.08 | |||||
Net earnings per share of common stock Diluted | $ | 0.07 | $ | 0.08 |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
14. Subsequent Events | We have evaluated the effects of all subsequent events from October 1, 2013 through the date the accompanying consolidated financial statements were available to be issued. Other that those set out above, there have been no subsequent events after September 30, 2013 for which disclosure is required. |
Nature_of_Organization_and_Sum1
Nature of Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |
Sep. 30, 2014 | ||
Notes to Financial Statements | ||
Nature of Organization | Creative Learning Corporation (“CLC” or the “Company”), formerly B2 Health, Inc., was incorporated March 8, 2006 in the State of Delaware. BFK Franchise Company LLC (“BFKF”) was formed in the State of Nevada on May 19, 2009. Effective July 2, 2010, CLC was acquired by BFKF in a transaction classified as a reverse acquisition. CLC concurrently changed its name from B2 Health, Inc. to Creative Learning Corporation. The financial statements represent the activity of BFKF from May 19, 2009 forward, and the consolidated activity of BFKF and CLC from July 2, 2010 forward. BFKF and CLC are hereinafter referred to collectively as the "Company". | |
In addition to the accounts of CLC and BFKF, the accompanying consolidated financial statements include the accounts of CLC’s subsidiaries, BFK Development Company LLC (“BFKD”) from November 25, 2009 (BFKD’s inception) forward, CI Franchise Company LLC (“CI”) from September 14, 2012 (CI’s inception) forward, and Sew Fun Franchise Company LLC (SF) from January 8, 2013 (SF’s inception) forward. | ||
The registration statements for BFK Development Company LLC, CI Franchise Company LLC, and Sew Fun Franchise Company LLC do not have a termination date associated with the Life of the Organizations. Each of the above listed LLC’s has a single member, controller 100% by the Company. | ||
BFKF held a 50% ownership interest in BFKD from November 25, 2009 through October 2, 2010. On October 3, 2010, the BFKF acquired the 50% noncontrolling interest in BFKD. Immediately following the acquisition of the noncontrolling interest, BFKF transferred its 100% interest in BFKD to CLC. | ||
Creative Learning Corporation operates wholly owned subsidiaries BFK FRANCHISE COMPANY, LLC, CI FRANCHISE COMPANY, LLC AND SEW FUN FRANCHISE COMPANY, LLC under the trade names Bricks 4 Kidz®, Challenge Island®, and Sew Fun Studios™ respectively, that offer children's enrichment and education franchises. | ||
Basis of Presentation | This summary of significant accounting policies is presented to assist the reader in understanding and evaluating the Company’s financial statements. The financial statements and notes are representation of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. | |
The Company uses the accrual basis of accounting and is presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes that the disclosures made are adequate to make the information presented not misleading. The information reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods set forth herein. | ||
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. | |
Variable Interest Entity | The Company follows the guidelines in FASB Codification of ASC 810 “Consolidation” which indicates "a legal entity that is deemed to be a business need not be evaluated by a reporting entity to determine if the legal entity is a Variable Interest Entity (“VIE")” unless any one of four conditions exist: | |
- | The reporting entity, its related parties, or both participated significantly in the design or redesign of the legal entity; | |
- | The legal entity is designed so that substantially all of its activities involve or are conducted on behalf of the reporting entity and its related parties; | |
- | The reporting entity and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the legal entity; or | |
- | The activities of the legal entity are primarily related to the securitizations or other forms of asset-backed financings or single-lessee leasing arrangements. | |
A VIE is an entity that either (a) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (b) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. If we determine that we have operating power and the obligation to absorb losses or receive benefits, we consolidate the VIE as the primary beneficiary, and if not, we do not consolidate. The Company has not identified any VIEs as of September 30, 2014. | ||
Fiscal Year | The Company operates on a September 30 fiscal year-end. | |
Related Parties | A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. | |
Use of Estimates | The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions made by management include allowance for doubtful accounts, allowance for deferred tax assets, depreciation of property and equipment, amortization of intangible assets, fair market value of equity instruments. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. | |
Cash and cash equivalents | The Company considers all highly liquid securities with original maturities of three months or less when acquired, to be cash equivalents. We had no cash equivalents at September 30, 2014 and 2013.The Company had cash of $3,061,458 and $1,904,193 as of September 30, 2014 and 2013, respectively. | |
The Company has restricted cash of $180,009 at September 30, 2014 and $100,754 at September 30, 2013 associated with a marketing funds collected from the franchisee’s. Per the franchise agreements a marketing fund of 2% of revenues is collected and held for promotion of the brand. (see note 6) | ||
The Company has one operating account with Wells Fargo that exceed the $250,000 FDIC limit by $2,748,000. The Company is confident the asset is secure based upon our history with and the stability of the institution. | ||
Accounts receivable | The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company believes its allowance for doubtful accounts as of September 30, 2014 and 2013 are adequate, but actual write-offs could exceed the recorded allowance. At September 30, 2014 and 2013, the Company’s allowance for doubtful accounts totaled $41,000, and $10,000, respectively. During the year ended September 30, 2014 and September 30, 2013 the value of accounts written-off to the reserve were approximately $12,000 and $0 respectively. | |
Property, Equipment and Depreciation | Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, which range from three to forty years. Expenditures for additions and improvements are capitalized, while repairs and maintenance costs are expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal. | |
Website development costs | The Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage. | |
Costs associated with the website consist primarily of website development costs paid to third parties. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. All capitalized web development cost are captured in property and equipment. | ||
Fair Value of Financial Instruments | The carrying amounts of cash, accounts and notes receivable, prepaid expenses, property and equipment, intangible assets, deposits, and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments. | |
The FASB Accounting Standards Codification (“ASC”) 825, Financial Instruments, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows: | ||
Level 1: | Quoted prices in active markets for identical assets or liabilities. | |
Level 2: | Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability. | |
Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | |
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | ||
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. | ||
Long-Lived Assets | The Company’s long-lived assets consisted of property and equipment, and intangible assets are reviewed for impairment in accordance with the guidance of the FASB Topic ASC 360, Property, Plant, and Equipment, and FASB ASC Topic 205, Presentation of Financial Statements. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Through September 30, 2014, the Company had not experienced impairment losses on its long-lived assets. However, there can be no assurances that demand for the Company’s products or services will continue, which could result in an impairment of long-lived assets in the future. | |
Revenue Recognition | Revenue is recognized on an accrual basis after services have been performed under contract terms, the service price to the client is fixed or determinable, and collectability is reasonably assured. | |
Since these franchises are primarily a mobile concept and do not require finding locations or construction, the franchisees can begin operations as soon as they leave training. The franchise fees are fully collectible and nonrefundable as of the date of the signing of the franchise agreement, but the franchise fees are not recognized as revenue until initial training has been completed and when substantially all of the services required by the franchise agreement have been fulfilled by the Company in accordance with ASC Topic 952-605 Revenue Recognition-Franchisor. Royalties and marketing fees are recognized as earned. | ||
As of September 30, 2014 and 2013 the Company had $0 and $35,900 respectively in unearned revenue for franchise fees collected but not yet earned per the revenue recognition policy. | ||
Advertising Costs | Advertising costs are expensed as incurred. The Company incurred advertising costs for the years ended September 30, 2014 and 2013 of approximately $920,000 and $445,000, respectively. | |
Income Taxes | The provision for income taxes, income taxes payable and deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are determined based on temporary differences between the financial carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. On a periodic basis, the Company assesses the probability that its net deferred tax assets, if any, will be recovered. If after evaluating all of the positive and negative evidence, a conclusion is made that it is more likely than not that some portion or all of the net deferred tax assets will not be recovered, a valuation allowance is provided by a charge to tax expense to reserve the portion of the deferred tax assets which are not expected to be realized. | |
The Company reviews its filing positions for all open tax years in all U.S. federal and state jurisdictions where the Company is required to file. | ||
When there are uncertainties related to potential income tax benefits, in order to qualify for recognition, the position the Company takes has to have at least a “more likely than not” chance of being sustained (based on the position’s technical merits) upon challenge by the respective authorities. The term “more likely than not” means a likelihood of more than 50 percent. Otherwise, the Company may not recognize any of the potential tax benefit associated with the position. The Company recognizes a benefit for a tax position that meets the “more likely than not” criterion at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon its effective resolution. Unrecognized tax benefits involve management’s judgment regarding the likelihood of the benefit being sustained. The final resolution of uncertain tax positions could result in adjustments to recorded amounts and may affect our results of operations, financial position and cash flows. | ||
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties at September 30, 2014 and September 30 2013, respectively, and has not recognized interest and/or penalties during the years ended September 30, 2014 and September 30, 2013, respectively, since there are no material unrecognized tax benefits. Management believes no material change to the amount of unrecognized tax benefits will occur within in the next 12 months. | ||
The tax years subject to examination by major tax jurisdictions include the years 2011 and forward by the U.S. Internal Revenue Service, and the years 2010 and forward for various states. | ||
Net earnings (loss) per share | ASC 260-10-45, “Earnings Per Share”, requires presentation of "basic" and "diluted" earnings per share on the face of the statements of operations for all entities with complex capital structures. Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted during the period. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. | |
Stock-based compensation | The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. | |
Recent accounting pronouncements | In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists(ASU 2013-11), to require that in certain cases, an unrecognized tax benefit, or portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the same taxing jurisdiction. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not believe the adoption of this standard will have a significant impact on the Company’s consolidated financial statements. | |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements. |
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Related Party Transactions Tables | |||||||||
Related Party Transactions | During the years ended September 30, 2014 and 2013, the Company paid related parties (companies related by common control) for the following expenses: | ||||||||
Commissions and Consulting | |||||||||
Fiscal Years Ending | |||||||||
30-Sep | 30-Sep | ||||||||
Related Party | 2014 | 2013 | |||||||
FranVentures, LLC | $ | 289,061 | $ | 248,127 | |||||
MC Logic, LLC | $ | 244,000 | $ | 137,000 | |||||
Leap Ahead Learning Company | $ | 83,000 | $ | 108,000 | |||||
$ | 616,061 | $ | 493,127 | ||||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | |||||||||
Sep. 30, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
Property and Equipment | Property and equipment consisted of the following: | |||||||||
Year End | Year End | |||||||||
September 30, | September 30, | |||||||||
Description | 2014 | 2013 | ||||||||
Equipment | $ | 44,930 | $ | 33,109 | ||||||
Furniture & Fixtures | 75,351 | 57,654 | ||||||||
Property Improvement | 233,615 | 233,615 | ||||||||
Software | 30,558 | 30,558 | ||||||||
Total Depreciable Assets | $ | 384,454 | $ | 354,936 | ||||||
Accumulated Depreciation | (98,238 | ) | (60,073 | ) | ||||||
NBV Fixed Assets | $ | 286,216 | $ | 294,863 | ||||||
Work In Progress (1) | 36,443 | - | ||||||||
$ | 322,659 | $ | 294,863 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Intangible Assets Tables | |||||
Intangible Assets | Creative Learning Corporation | ||||
Intangible Asset Roll-forward | |||||
Balance October 1, 2012 | 46,720 | ||||
Additions | 48,550 | ||||
Disposals | - | ||||
Balance September 30, 2013 | 95,270 | ||||
Additions | 77,474 | ||||
Disposals | (46,990 | ) | |||
Balance September 30, 2014 | 125,754 |
Notes_and_Other_Receivables_Ta
Notes and Other Receivables (Tables) | 12 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Notes to Financial Statements | ||||||||||||||
Notes payment schedules | 2015 | 2016 | Total | |||||||||||
Payment schedules for Notes And Other Receivables | $ | 126,339 | $ | 67,749 | $ | 194,088 |
Stock_Options_and_Warrants_Tab
Stock Options and Warrants (Tables) | 12 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Notes to Financial Statements | ||||||||||||||
Stock option activity | The company incurred and recorded compensation expense of $56,630 for the year ended September 30, 2014 and $6,613 for the year ended September 30, 2013. | |||||||||||||
Description | Number of | Weighted | Expiration | Aggregate | ||||||||||
Shares | Average Exercise | Date | Intrinsic | |||||||||||
Price | Value | |||||||||||||
Outstanding October 1, 2012 | - | - | ||||||||||||
Granted July 1, 2013 | 50,000 | 0.6 | 12/31/15 | $ | - | |||||||||
Outstanding 09/30/2013 | 50,000 | 0.6 | $ | - | ||||||||||
Granted February 3, 2014 | 70,000 | 1.55 | 12/31/16 | $ | - | |||||||||
Outstanding 09/30/2014 | 120,000 | 1.15 | - | |||||||||||
Exercisable at September 30, 2014 | 50,000 | |||||||||||||
Expected to vest at September 30, 2014 | 120,000 | |||||||||||||
Stock compensation expense | The Company recognized stock compensation expense as follows: | |||||||||||||
Year Ended | Year Ended | |||||||||||||
30-Sep | 30-Sep | |||||||||||||
2014 | 2013 | |||||||||||||
Stock Option Expense | $ | 56,630 | $ | 6,613 | ||||||||||
Black-Scholes option-pricing model | The value of the options granted during the various periods was estimated at the date of grant using the Black-Scholes option-pricing model and the following assumptions: | |||||||||||||
2014 | 2013 | |||||||||||||
Year Options were granted | ||||||||||||||
Market value of stock on grant date | $ | 1.55 | $ | 0.6 | ||||||||||
Risk-free interest rate | 0.3 | % | 0.61 | % | ||||||||||
Dividend Yield | 0 | % | 0 | % | ||||||||||
Volatility Factor | 100 | % | 36 | % | ||||||||||
Weighted average expected life | 2 years | 2 years | ||||||||||||
Expected forfeiture rate | 0 | % | 0 | % |
Franchise_Operations_Tables
Franchise Operations (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Franchise Operations | The Company currently supports independently owned franchises located in 43 states, 9 Canadian provinces and 31 other countries. Following is a summary of the annual franchise activity: | ||||||||
BFK Franchise Company LLC | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Franchises in Operation - beginning of year | 380 | 210 | |||||||
Franchises sold during the year | 210 | 175 | |||||||
Franchises cancelled, terminated or repurchased during the year | (6 | ) | (5 | ) | |||||
Franchises in operation - end of year | 584 | 380 | |||||||
CI Franchise Company LLC | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Franchises in Operation - beginning of year | 15 | - | |||||||
Franchises sold during the year | 21 | 15 | |||||||
Franchises cancelled, terminated or repurchased during the year | (2 | ) | - | ||||||
Franchises in operation - end of year | 34 | 15 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Lease Commitments | The following table summarizes the Company’s contractual lease obligations as of September 30, 2014: | ||||||||||||||||
2015 | 2016 | 2017 | Total | ||||||||||||||
Lease of office space | 28,500 | 28,500 | 26,600 | $ | 83,600 | ||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||
Deferred income tax assets and liabilities | The tax years subject to examination by major tax jurisdictions include the years 2010 and forward by the U.S. Internal Revenue Service, and the years 2009 and forward for various states. | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2014 | 2013 | |||||||||||||||||
Deferred tax assets: | ||||||||||||||||||
Short-term | $ | 48,723 | $ | 1,058 | ||||||||||||||
Long-term | -0- | -0- | ||||||||||||||||
Total deferred tax asset | $ | 48,723 | $ | 1,058 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||||
Short-term | $ | (27,780 | ) | $ | -0- | |||||||||||||
Long-term | -0- | -0- | ||||||||||||||||
Total deferred tax liabilities | $ | (27,780 | ) | $ | -0- | |||||||||||||
Total deferred tax assets | 48,723 | 1,058 | ||||||||||||||||
Net deferred tax assets (liability) | $ | 20,943 | $ | 1,058 | ||||||||||||||
Temporary differences portion of the deferred assets and liabilities | The types of temporary differences between the tax basis of assets and their financial reporting amounts that give rise to a significant portion of the deferred assets and liabilities are as follows: | |||||||||||||||||
30-Sep-14 | 30-Sep-13 | |||||||||||||||||
Temporary | Tax | Temporary | Tax | |||||||||||||||
Difference | Effect | Difference | Effect | |||||||||||||||
Deferred tax assets: | ||||||||||||||||||
Depreciation timing difference | $ | -0- | $ | -0- | $ | 3,084 | $ | 1,058 | ||||||||||
Allowance for bad debt | 41,000 | 16,195 | -0- | -0- | ||||||||||||||
Florida income tax | 82,350 | 32,528 | -0- | -0- | ||||||||||||||
Total deferred tax asset | 123,350 | 48,723 | 3,084 | 1,058 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||||
Depreciation timing difference | (70,329 | ) | (27,780 | ) | -0- | -0- | ||||||||||||
Total deferred liability | (70,329 | ) | (27,780 | ) | -0- | -0- | ||||||||||||
Net deferred tax asset | $ | 53,021 | $ | 20,943 | $ | 3,084 | $ | 1,058 | ||||||||||
Provisions for income taxes | The components of the provisions for income taxes for fiscal years 2014 and 2013 are as follows: | |||||||||||||||||
2014 | 2013 | |||||||||||||||||
Current: | ||||||||||||||||||
Federal | $ | 489,188 | $ | 10,884 | ||||||||||||||
State | 82,822 | 2,247 | ||||||||||||||||
Total current provision | 572,010 | 13,131 | ||||||||||||||||
Deferred: | ||||||||||||||||||
Federal | (20,943 | ) | (1,058 | ) | ||||||||||||||
State | - | - | ||||||||||||||||
Total deferred provision | (20,943 | ) | (1,058 | ) | ||||||||||||||
Total provision | $ | 551,067 | $ | 12,073 | ||||||||||||||
Federal statutory rate applied to income before taxes | The income tax provision differs from that computed using the federal statutory rate applied to income before taxes as follows for fiscal years 2014 and 2013: | |||||||||||||||||
2014 | 2013 | |||||||||||||||||
Amount | % | Amount | % | |||||||||||||||
Provision at statutory rates | $ | 489,188 | 32.13 | % | $ | 10,884 | 17.13 | % | ||||||||||
State income tax, net of federal benefit | 82,822 | 5.5 | % | 2,247 | 3.54 | % | ||||||||||||
Other temporary items | ||||||||||||||||||
Bad Debt | (16,195 | ) | 1.1 | % | - | |||||||||||||
Florida income tax | (32,528 | ) | 2.2 | % | ||||||||||||||
Depreciation | 27,780 | 1.9 | % | (1,058 | ) | 1.7 | % | |||||||||||
Other permanent items | ||||||||||||||||||
Total income tax provision | $ | 551,067 | 36.23 | % | $ | 12,073 | 19 | % |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Basic and diluted net income (loss) per share | The following table sets for the computation of basic and diluted net income (loss) per share: | ||||||||
Year ended | |||||||||
30-Sep | |||||||||
2014 | 2013 | ||||||||
Net income attributed to common stockholders | $ | 865,439 | $ | 947,956 | |||||
Basic weighted average outstanding shares of common stock | 11,812,861 | 11,675,102 | |||||||
Dilutive effect of common stock equivalents (options of 50,252 and stock of 6,905) as of September 30, 2014. | 57,157 | 3,771 | |||||||
Dilutive weighted average common stock equivalents | 11,870,018 | 11,678,873 | |||||||
Net earnings per share of common stock Basic | $ | 0.07 | $ | 0.08 | |||||
Net earnings per share of common stock Diluted | $ | 0.07 | $ | 0.08 |
Nature_of_Organization_and_Sum2
Nature of Organization and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Nature Of Organization And Summary Of Significant Accounting Policies Details Narrative | ||
Cash equivalents | $3,061,458 | $1,904,193 |
Restricted cash | 180,009 | 100,754 |
Allowance for doubtful accounts | 41,000 | 10,000 |
Allowance for doubtful accounts written-off | 12,000 | 0 |
Unearned revenue | 0 | 35,900 |
Advertising costs | $920,000 | $445,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Commissions and Consulting | $616,061 | $493,127 |
FranVentures, LLC [Member] | ||
Commissions and Consulting | 289,061 | 248,127 |
MC Logic, LLC [Member] | ||
Commissions and Consulting | 244,000 | 137,000 |
Leap Ahead Learning Company [Member] | ||
Commissions and Consulting | $83,000 | $108,000 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Property And Equipment Details | ||
Equipment | $44,930 | $33,109 |
Furniture and Fixures | 75,351 | 57,654 |
Property Improvement | 233,615 | 233,615 |
Software | 30,558 | 30,558 |
Total Depreciable Assets | 384,454 | 354,936 |
Accumulated Depreciation | -98,238 | -60,073 |
NBV Fixed Assets | 286,216 | 294,863 |
Work In Progress | 36,443 | |
Net | $322,659 | $294,863 |
Property_and_Equipment_Details1
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $39,915 | $30,267 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Intangible Assets Details | ||
Beginning Balance | $95,270 | $46,720 |
Additions | 77,474 | 48,550 |
Disposals | -46,990 | |
Ending Balance | $125,754 | $95,270 |
Intangible_Assets_Details_Narr
Intangible Assets (Details Narrative) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 |
Intangible assets | $125,754 | $95,270 | $46,720 |
Second Franchise [Member] | |||
Intangible assets | 25,250 | 25,250 | |
Third Franchise [Member] | |||
Intangible assets | $23,300 | $23,300 |
Notes_and_Other_Receivables_De
Notes and Other Receivables (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Notes to Financial Statements | ||
Payment schedules for Notes And Other Receivables, 2015 | $126,339 | |
Payment schedules for Notes And Other Receivables, 2016 | 67,749 | |
Payment schedules for Notes And Other Receivables | $194,088 | $131,792 |
Notes_and_Other_Receivables_De1
Notes and Other Receivables (Details Narrative) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Notes to Financial Statements | ||
Notes receivables from related parties | $70,000 | $70,000 |
Notes and other receivables | 194,088 | 131,792 |
Foreign Tax Credits | $22,729 |
Accrued_Marketing_Fund_Details
Accrued Marketing Fund (Details Narrative) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Notes to Financial Statements | ||
Accrued marketing fund liability balances | $180,009 | $100,754 |
Notes_Payable_Details_Narrativ
Notes Payable (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Notes to Financial Statements | ||
Remaining balance on promissory note | $0 | $20,000 |
Issuance of common stock | 20,000 | 20,000 |
Deferred commission payments | $2,225 | $8,857 |
Common_Stock_Issuances_Details
Common Stock Issuances (Details Narrative) (USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Common stock issued for payment of a promissory note to a related party | 20,000 |
Common stock issued for payment of a promissory note to a related party, Value | $20,000 |
Common stock issued for payment of a promissory note to a related party, Price | $1 |
First Issuance [Member] | |
Common stock issued to the acquisition of a third Franchise concept | 35,000 |
Common stock issued to the acquisition of a third Franchise concept, Value | 17,500 |
Common stock issued to the acquisition of a third Franchise concept, Price | $0.50 |
Common stock issued for exchange for consulting services | 35,000 |
Common stock issued for exchange for consulting services, Value | 21,000 |
Common stock issued for exchange for consulting services, Price | $0.60 |
Second Issuance [Member] | |
Common stock issued to the acquisition of a third Franchise concept | 10,000 |
Common stock issued to the acquisition of a third Franchise concept, Value | 5,800 |
Common stock issued to the acquisition of a third Franchise concept, Price | $0.58 |
Common stock issued for exchange for consulting services | 5,000 |
Common stock issued for exchange for consulting services, Value | 3,000 |
Common stock issued for exchange for consulting services, Price | $0.60 |
Third Issuance [Member] | |
Common stock issued for exchange for consulting services | 15,000 |
Common stock issued for exchange for consulting services, Value | $9,000 |
Common stock issued for exchange for consulting services, Price | $0.60 |
Stock_Options_and_Warrants_Det
Stock Options and Warrants (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Number of Shares | ||
Outstanding at beginning of year | 50,000 | |
Granted July 1, 2013 | 50,000 | |
Granted February 3, 2014 | 70,000 | |
Outstanding at end of year | 120,000 | 50,000 |
Exercisable at September 30, 2014 | 50,000 | |
Expected to vest at September 30, 2014 | 120,000 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of year | $0.60 | |
Granted July 1, 2013 | $0.60 | |
Granted February 3, 2014 | $1.55 | |
Outstanding at end of year | $1.15 | $0.60 |
Expiration Date | ||
Granted July 1, 2013 | 12/31/15 | |
Granted February 3, 2014 | 12/31/16 | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value of share outstanding | ||
Granted July 1, 2013 | ||
Granted February 3, 2014 | ||
Aggregate intrinsic value of share outstanding |
Stock_Options_and_Warrants_Det1
Stock Options and Warrants (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options And Warrants Details 1 | ||
Stock Option Expense | $56,630 | $6,613 |
Stock_Options_and_Warrants_Det2
Stock Options and Warrants (Details 2) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options And Warrants Details 2 | ||
Market value of stock on grant date | $1.55 | $0.60 |
Risk-free interest rate | 0.30% | 0.61% |
Dividend Yield | 0.00% | 0.00% |
Volatility Factor | 100.00% | 36.00% |
Weighted average expected life | 2 years | 2 years |
Expected forfeiture rate | 0.00% | 0.00% |
Stock_Options_and_Warrants_Det3
Stock Options and Warrants (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Stock Options And Warrants Details Narrative | ||
Compensation expense | $56,630 | $6,613 |
Franchise_Operations_Details
Franchise Operations (Details) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
BFK Franchise Company LLC [Member] | ||
Franchises in operation - beginning of year | 380 | 210 |
Franchises sold during the year | 210 | 175 |
Franchises cancelled, terminated or repurchased during the year | -6 | -5 |
Franchises in operation - end of year | 584 | 380 |
CI Franchise Company LLC [Member] | ||
Franchises in operation - beginning of year | 15 | |
Franchises sold during the year | 21 | 15 |
Franchises cancelled, terminated or repurchased during the year | -2 | |
Franchises in operation - end of year | 34 | 15 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Sep. 30, 2014 |
Lease of office space | |
2015 | $28,500 |
2016 | 28,500 |
2017 | 26,600 |
Total | $83,600 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Commitments And Contingencies Details Narrative | ||
Rent expense | $18,106 | $49,131 |
Outstanding balance of note | $55,000 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Deferred tax assets: | ||
Short-term | $48,723 | $1,058 |
Long-term | 0 | 0 |
Total deferred tax asset | 48,723 | 1,058 |
Deferred tax liabilities: | ||
Short-term | -5,550 | 0 |
Long-term | -22,230 | |
Total deferred tax liabilities | -27,780 | 0 |
Total deferred tax assets | 48,723 | 1,058 |
Net deferred tax assets (liability) | $20,943 | $1,058 |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Deferred tax liabilities: | ||
Net deferred tax asset | $48,723 | $1,058 |
Temporary Difference [Member] | ||
Deferred tax assets: | ||
Depreciation timing difference | 0 | 3,084 |
Allowance for bad debt | 41,000 | 0 |
Florida income tax | 82,350 | 0 |
Total deferred tax asset | 123,350 | 3,084 |
Deferred tax liabilities: | ||
Depreciation timing difference | -70,329 | 0 |
Total deferred liability | -70,329 | 0 |
Net deferred tax asset | 53,021 | 3,084 |
Tax Effect [Member] | ||
Deferred tax assets: | ||
Depreciation timing difference | 0 | 1,058 |
Allowance for bad debt | 16,195 | 0 |
Florida income tax | 32,528 | 0 |
Total deferred tax asset | 48,723 | 1,058 |
Deferred tax liabilities: | ||
Depreciation timing difference | -27,780 | 0 |
Total deferred liability | -27,780 | 0 |
Net deferred tax asset | $20,943 | $1,058 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Current: | ||
Federal | $489,188 | $10,884 |
State | 82,822 | 2,247 |
Total current provision | 572,010 | 13,131 |
Deferred: | ||
Federal | -20,943 | -1,058 |
State | ||
Total deferred provision | -20,943 | -1,058 |
Total provision | $551,067 | $12,073 |
Income_Taxes_Details_3
Income Taxes (Details 3) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income Taxes Details 3 | ||
Provision at statutory rates | $489,188 | $10,884 |
State income tax, net of federal benefit | 82,822 | 2,247 |
Other temporary items | ||
Bad Debt | -16,195 | |
Florida income tax | -32,528 | |
Depreciation | 27,780 | -1,058 |
Other permanent items | ||
Total income tax provision | $551,067 | $12,073 |
Provision at statutory rates | 32.13% | 17.13% |
State income tax, net of federal benefit | 5.50% | 3.54% |
Other temporary items | ||
Bad Debt | 1.10% | |
Florida income tax | 2.20% | |
Depreciation | 1.90% | 1.70% |
Other permanent items | ||
Total income tax provision | 36.23% | 19.00% |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Income Taxes Details Narrative | ||
Net loss carryovers | $907,000 | |
Taxable income | $1,416,506 | $64,000 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Earnings Per Share Details | ||
Net income attributed to common stockholders | $865,439 | $947,956 |
Basic weighted average outstanding shares of common stock | 11,812,861 | 11,675,102 |
Dilutive effect of common stock equivalents (options of 50,252 and stock of 6,905) as of September 30, 2014. | 57,157 | 3,771 |
Dilutive weighted average common stock equivalents | 11,870,018 | 11,678,873 |
Net earnings per share of common stock Basic | $0.07 | $0.08 |
Net earnings per share of common stock Diluted | $0.07 | $0.08 |